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Pre-Qualification
Pre-qualification occurs before the loan process
actually begins, and is usually the first step after
initial contact is made. The lender gathers
information about the income and debts of the
borrower and makes a financial determination about
how much house the borrower may be able to afford.
Different loan programs may lead to different
values, depending on whether you are qualified for
them, so be sure to get a pre-qualification for each
type of program you are suited for.
Application
The application is actually the beginning of the
loan process and usually occurs between days one and
five of the loan. The buyer, now referred to as a
"borrower", completes a mortgage application with
the loan officer and supplies all of the required
documentation for processing. Various fees and down
payments are discussed at this time and the borrower
will receive a Good Faith Estimate (GFE) and a
Truth-In-Lending statement (TIL) within three days
that itemizes the rates and associated costs for
obtaining the loan.
Processing
Processing occurs between days 5 and 20 of the loan.
The "processor" reviews the credit reports and
verifies the borrower's debts and payment histories
as the VODs and VOEs are returned. If there are
unacceptable late payments, collections for
judgment, etc., a written explanation is required
from the borrower. The processor also reviews the
appraisal and survey and checks for property issues
that may require further discernment. The
processor's job is to put together an entire package
that may be underwritten by the lender.
Underwriting
Lender underwriting occurs between days 21 and 30 or
sooner. The underwriter is responsible for
determining whether the combined package passed over
by the processor is deemed as an acceptable loan. If
more information is needed, the loan is put into
"suspense" and the borrower is contacted to supply
more documentation.
Mortgage Insurance
Mortgage insurance underwriting occurs when the
borrower has less than 20% of the loan amount to put
towards a down payment. At this time, the loan is
submitted to a private mortgage guaranty insurer,
who provides extra insurance to the lender in case
of default. As above, if more information is needed
the loan goes into suspense. Otherwise it is usually
returned back to the mortgage company within 48
hours.
Pre-Closing
Pre-Closing occurs between days 25 and 30. During
this time the title insurance is ordered, all
approval contingencies, if any, are met, and a
closing time is scheduled for the loan.
Closing
Closing usually occurs between days 25 and 45 of the
loan (depending upon the designated length of your
escrow). At the closing, the lender "funds" the loan
with a cashier's check, draft or wire to the selling
party in exchange for the title to the property.
This is the point at which the borrower finishes the
loan process and actually buys the house.
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